Your financial institution is in the market for a new vendor. Maybe it’s a new mobile banking app, an IT security system or a consulting team. You have a shortlist of potential partners. Now do something revolutionary with it: Let the vendors know who they’re competing against.
Most institutions treat their vendor shortlist like a state secret. They fear that if vendors get wind of the competition, all heck will break loose. Vendors will get mad. They’ll fight, call each other names and sling mud. Things will be awkward and uncomfortable.
Move past this fear. Not only is it unwarranted, it’s costing your institution an opportunity to better assess vendors.
No one knows the competition better than the competition. Given a chance, a vendor can highlight how its product or service stands out from a particular competitor, giving you a clearer picture of its features, benefits and capabilities. It can also position you for better pricing because the vendor knows you are seriously evaluating several options.
Just think of when you buy a car. When you walk into a Honda dealership, you probably have no problem telling the salesperson you’re also looking at Toyota and Nissan. The salesperson won’t get upset. She won’t tell you you’re insane for considering Toyota. She’ll make a case for why Honda is the best choice by highlighting the differences between the cars—everything from gas mileage and price to subtle differences in the design of the backup camera. She might even hand you a sheet comparing the vehicles.
When you repeat this at each dealership, you’ll have a fuller picture of the differences between the cars. You’ll see potential strengths and weaknesses in a new way and learn about differences you hadn’t even thought to ask about. All that data helps you make a more informed choice and decide which car’s features and benefits are the best match for your needs.
The same is true for your financial institution and its customers. When a potential commercial loan customer comes in inquiring about a loan to buy a property, you might ask what other financial institutions the customer is speaking with. Do you use that as an opportunity to smear the competition? Of course not. You take it as a chance to differentiate your institution, showing how you’ll deliver better terms, rates or service. You make a case for what your institution provides and what sets it apart.
Potential vendors will do the same for you if you let them. You’ll have more information to make a smart decision and meet due diligence requirements. In the rare event a vendor starts calling the competition names, you’ll learn something critical about working with that vendor—something you won’t find on a comparison sheet.
Free markets work a whole lot better when information is freely available. Don’t limit the data available to your institution by guarding your vendor shortlist. Share it and reap the benefits.